The Building Blocks

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The Building Blocks

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In our attempt to locate possible institutional pending orders, we should familiarize ourselves with four distinct patterns which are essentially the building blocks of our price action strategy. These blocks are formed by combination of individual candles which could be Momentum candles or equal fight candles (See Candlesticks post). Each of the building block signifies important institutional activity. They are areas where potential institutional orders are pending.

1. The Fall-Pause-Rise (FPR) pattern

In this pattern we have a good fall in price, followed by a brief pause in price with one or more candles followed by a strong rise in price. The strong rise in price often leaves Buy pending orders behind which may cause price to bounce from that area if price revisits it. This is a reversal pattern.

2. The Rise-Pause-Rise (RPR) pattern

In this pattern we have a good rise in price, followed by a brief pause in price with one or more candles followed by a strong rise in price. The strong rise in price often leaves Buy pending orders behind which may cause price to bounce from that area if price revisits it. This is a continuation pattern.

3. The Rise-Pause-Fall (RPF) pattern

In this pattern we have a good rise in price, followed by a brief pause in price with one or more candles followed by a strong fall in price. The strong fall in price often leaves Sell pending orders behind which may cause price to bounce downwards from that area if price revisits it. This is a reversal pattern.

4. The Fall-Pause-Fall (FPF) pattern

In this pattern we have a good fall in price, followed by a brief pause in price with one or more candles followed by a strong fall in price. The strong fall in price often leaves Sell pending orders behind which may cause price to bounce downwards from that area if price revisits it. This is a continuation pattern.

These are the four building blocks which would be used in spotting institutional activity on the charts.

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A.G. Traders is a group of passionate professional traders trading across Stocks, Futures, Options and ETFs. We believe that trading the financial markets is a serious business and not for casual enthusiasts. Our cardinal pillars are Knowledge, Strategy, Risk Management and Right Psychology for long term success in the markets.
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A.G. Traders is a group of passionate professional traders trading across Stocks, Futures, Options and ETFs. We believe that trading the financial markets is a serious business and not for casual enthusiasts. Our cardinal pillars are Knowledge, Strategy, Risk Management and Right Psychology for long term success in the markets.
  • https://www.youtube.com/channel/UCBSwknutI2cyXAisOXCq4Fg
  • a.g.tradersworld@gmail.com
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